The latest information in the digital asset industry
Despite the decline in enthusiasm in the trading market over the past few years, innovations and advances have been seen in all areas of cryptocurrency.[1] Layer 2 scaling solutions for Ethereum and Bitcoin blockchains, improved cryptocurrency mining equipment, new applications for non-fungible tokens (NFTs), decentralized finance (DeFi) protocols, decentralized autonomous organizations (DAOs), and more. The universe continues to flourish. I'll list a few.[2]
As previously discussed, open source innovation is a tenet of the crypto industry and the underlying blockchain technology that powers it, but companies working on this technology should consider securing intellectual property rights for their innovations. Must be. This could include patenting inventions that complement or are adjacent to open distributed public ledgers such as Bitcoin and Ethereum.
Patenting activities for crypto assets and other blockchain technologies
As the graph below shows, patenting activity for crypto assets and other blockchain-related innovations has increased year over year in recent years, but activity has slowed recently.
The chart below shows that major payment processors (Mastercard, VISA, Alipay, etc.), banks (Bank of American, Capital One), various retailers and technology conglomerates are among the top patent filers in this area. It shows that
The data above shows that larger and more established companies are the most aggressive in patenting cryptocurrencies and other blockchain-related innovations. Nevertheless, smaller or early-stage companies should equally consider patent protection for core technologies that may be key to a successful business strategy.
Important points regarding patent drafting from recent patent disputes
Although the number of patent infringement lawsuits related to cryptocurrencies and other blockchain technologies remains relatively low, companies considering patent protection in this area should consider the following cases, which provide some important lessons: Must be.
Rady’s blockchain identification patent succumbs to §101 challenge. In March 2020, Rady awarded defendants Boston Consulting Group LLC (“BCG”) and De Beers UK Limited (“De Beers”) a U.S. patent disclosing the use of blockchain technology to record identifying signatures on physical items. No. 10,469,250. , something with unique random characteristics, such as jewelry or artwork. The '250 patent claims use spectral analysis and 3D scanning to determine the unique signature of such items and use that signature to authenticate and track the items through the supply chain without going through a central authority. It's about things.
Defendants move to dismiss the suit because the claims are directed to patent-ineligible abstract concepts of collecting, processing, and storing data to track physical items (in this case, spectral storage). The patent was claimed to be invalid under Section 101 of the Patent Act. By “recording on the blockchain” the analysis and 3D scan data. Mr. De Beers said: . . The court found that this was an abstract idea that was not patentable. ”
As De Beers explained, the Supreme Court landmark alice decision[3] Addressed claims regarding common computer implementations of “account ledgers” for storing financial obligation data. With respect to the '250 patent, defendants argued that claims relating to conventional imaging hardware that collects spectral analysis and 3D scan data are “abstract” under the following statutes: alice. They further argued that because the claims did not improve anything about computer technology itself, the claims lacked an “inventive concept” that could turn an abstract idea into patent-eligible subject matter.
Rady argued that the novelty of its patent claims stemmed from a “complex combination” of computer, 3D spatial identification, and spectral analysis components, but this claim was based on the fact that the '250 patent was based on the same prior art technology for hardware. was undermined by the fact that it cited the disclosure of can be used to generate both Of these claimed characteristics. The court agreed with the defendants and found that the claims were directed to abstract concepts of data collection, analysis, and storage. In doing so, the court stated that “blockchain,” like other material elements of the claims, “is akin to computer hardware.” alice . . . “Well-understood, routine, conventional activities.”[4]
Ladi demonstrates that patent eligibility remains a potentially detrimental threshold issue for blockchain-related innovation and highlights the importance of crafting patent claims that can withstand such challenges. . A claims strategy may include listing technical contributions supported by a detailed description in the specification of how the contribution differs from well-known traditional blockchain usage. The inclusion of such contributions in the specification with sufficient detail and technical authority allows the patentee to maintain subject matter eligibility, whether during the patent office application or subsequent litigation. may help you successfully withstand a challenge.
Lancium claims and inventor rights disputes. Lancium owns a patent for regulating power consumption during cryptocurrency mining operations (“demand response and curtailment” technology). In 2020, Lancium sued Layer1 Technologies, Inc. for infringing U.S. Patent No. 10,608,433 (the “'433 Patent”).[5] The parties settled the lawsuit in 2021. In May of this year, Lancium asserted the '433 patent and six additional patents against US Data Mining Group, Inc. (dba US Bitcoin) and other defendants involved in cryptocurrency mining.
While Lancium's patent claims were ongoing, in April 2021, Bearbox LLC and its CEO Austin Storms sued Lancium to add Storms as a co-inventor to the '433 patent.[6] Records show that in late 2018 and 2019, Storms began developing the “Bare Box System.”— A container that houses a cryptocurrency miner and the source code to operate the miner based on energy demand. Separately, Lancium filed its '433 patent in January 2018 and had 120 miners operating at its Houston facility using off-the-shelf control software by fall 2018. At a crypto mining conference in May 2019, Storms met with Rancium executives to discuss potential cooperation. Storms emailed the BearBox system's specifications, diagrams, and data files modeling simulations of the system's functionality to Lancium executives.
After analyzing Storm's email files, the claims of the '433 patent, and the chronology of events, the court found that the plaintiffs had no knowledge of the '433 patent's claimed invention prior to Storm's independent conception of Rancium. The judgment was in favor of Rancium, finding that the company had failed to prove that it had communicated the information.[7]
bear box This indicates that patent inventors can pose complex legal and factual issues and requires technology organizations to implement advanced procedures for documenting the development of patentable inventions. It emphasizes the need. For example, employee and third-party consulting agreements may contain robust IP transfer clauses, or joint collaboration agreements that allocate intellectual property rights in a manner consistent with the parties' intentions may result in subsequent inventorship rights. It may help avoid conflicts. Similarly, creating a contemporaneous record of potentially original contributions made by a particular party, including when the contribution was made relative to other events in the timeline, can also Helps avoid conflicts.
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In addition to the problems introduced in Ladi and lancium In some cases, other patent considerations may arise in connection with digital assets and other blockchain-related technologies. For example, in a previous post we discussed the “split infringement” scenario and extraterritorial considerations. We will continue to monitor patenting activity in this rapidly growing field and highlight notable developments.
[1] “Crypto” is often used as an abbreviation for “crypto-assets.” This includes, for example, cryptocurrencies and various tokens (utility tokens, platform tokens, NFTs).
[2] Covington's attorneys have extensive experience counseling clients on a variety of legal issues surrounding crypto assets.
[3] Alice Corporation Pty. Ltd. v. CLS Bank Intern.573 US 208 (2014) (relating to patent eligibility).
[4] Rady v. Boston Consulting Group LLC.*3 of 2022 WL 976877 (ordered March 31, 2022). The case is currently on appeal to the Federal Circuit.
[5] Lancium LLC v. Layer1 Technologies, Inc.6-20-cv-00739 (WDTX).
[6] BearBox LLC et al. v. Lancium LLC et al.CA No. 21-534 (Delaware).
[7] Same as above.Dkt. 262 (Opinion March 6, 2023) ¶¶130-145. This case is also on appeal to the Federal Circuit.
